A major barrier of resistance
The next week could be really interesting for cable, with the Fed and BoE being among the two most aggressive central banks and inflation in both countries continuing to rise rapidly.
The pair ran into resistance last month around 1.37, where the 200/233-day SMA band crossed the 50 fib level to provide a considerable barrier of resistance.
It’s been on the rise again over the last couple of weeks but the past five days has seen more volatility than direction. Both countries are seeing high inflation and five or six rate hikes are already priced in for the central banks. The question is how much further it can go?
The recent trend has been bullish and if that continues, 1.37 will once again be key for the same reasons. A move above here would be extremely bullish , with the next test coming around 1.3834 – prior high and 61.8 fib level.
Equally, a rotation lower could also send a strong signal, especially coming ahead of the previous high.
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